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Misrepresentation

A misrepresentation is an untrue statement of fact by one

party which has induced the other to enter into the contract.

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Different Types of Misrepresentation

Fraudulent misrepresentation
- False statement made by someone who knows it is false ;
basically it is a dishonest statement
Negligent misrepresentation
- A false statement made carelessly or without care
Innocent misrepresentation
- A false statement made believing in its truth and having
reasonable grounds to believe that it is true

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Remedies for Misrepresentation

Fraudulent misrepresentation
- Rescission and damages

Negligent misrepresentation
- Rescission and damages

Innocent misrepresentation
- Rescission only

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Mistake

Mistake in the law of contract arises when parties are

mistaken as to the terms of the contract or an important fact in
the contract

•Example;
Where a party enters into a contract with an intention to buy
and have his goods arrive on a ship named ‘peerless’ while the
other party (seller) agrees to ship his goods on ‘peerless’ but
this is another ship that arrives much later.
Raffles v Wickelhaus
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Mistake

If the courts find that parties had entered into a contract with
a mistake in their mind, the contract will not be valid or be
‘void ab initio’ - Void from the beginning

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Types of Mistakes

1. Common mistake
Common mistake occurs when both parties to a contract
make the same fundamental mistake of fact. A party sells a
painting thinking it is an oil painting, whereas it is a water
painting, and the other also believes it to be so.

2. Mutual mistake
This form of mistake occurs when both parties have a mistake
in their mind which is cross-purposes with each other.
Raffles v Wickelhaus
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Types of Mistakes

3. Unilateral mistake
Where only one of the parties is mistaken and the other is not.
Example like in a fraudulent misrepresentation situation

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Incapacity

Traditionally, anyone under 21 was regarded by the law as a

minor (in fact the law usually called such people ‘infants’). Their
ability to make contracts was first limited by the common law

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Illegality
If a contract is entered into by parties and the
performance of the contract is illegal or immoral, the
contract would be taken to be void or invalid.

Example of illegal or immoral contracts

Contracts that require the performance of criminal
activities
Contracts that promote immoral activities
Contracts that are against public policy
e.g. Restraint of trade clauses

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Duress
Occurs when one party uses improper threat or act to obtain
a contract.

 Threats of illegal conduct – to engage in illegal conduct

such as crime/tort to win agreement

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Duress
Five conditions need to be satisfied in order for there to be a finding of duress:

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Undue influence

A court will find undue influence was exercised when

someone who shares a special trust with the victim, uses that
trust to persuade them into signing (or not to sign) a contract.
It is essentially an abuse of the victim’s confidence and trust.

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Remedies
When a contract is breached, there are three different types of
remedy that can be available to the innocent party:

Remedies

Remedies
Common law Equitable
agreed between
remedies remedies
the parties

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Common law remedies

An award of damages is the usual remedy for a breach of

contract.
It is an award of money that aims to compensate the innocent
party for the financial losses they have suffered as a result of the
breach.
The general rule is that innocent parties are entitled to such
damages as will put them in the position they would have been
in if the contract had been performed.

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Equitable remedies

Equitable remedies are available at the discretion of the

court when the common law remedies are inadequate to
compensate the claimant.
These remedies are specific performance (compelling
someone to perform their obligations under a contract) and an
injunction (normally ordering defendant not to do something).

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Agreed remedies

Agreed remedies are sometimes provided for in the contract

itself.

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Thank you

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